The 21 former prisoners from the West Bank arrived by bus to President Mahmoud Abbas' compound in Ramallah, where they were met by dignitaries and supporters.

The release of the 26 prisoners was part of a four-stage deal to coincide with the PLO's return to peace negotiations in July.

All 26 were convicted of killing Israelis, with most of the attacks occurring before the 1993 Oslo Accords. A first group of 26 prisoners was freed on Aug. 13.

In Ramallah, freed prisoner Riziq Salah from al-Khader near Bethlehem said his happiness to be free was overshadowed by a deep sadness for cellmates who were left behind.

"I lived with my wife five years but with my cellmates, I have lived 21 years seeing them 24 hours a day," he told Palestine TV by telephone.

In Israel, the move to release the second group has sparked tensions within Prime Minister Benjamin Netanyahu's coalition, and around 2,000 Israelis rallied outside Ofer prison on Monday chanting "Death to terrorists!" and raising placards reading: "Are we crazy? We're releasing murderers."

Among the demonstrators was Israeli Housing Minister Uri Ariel, a hardliner from the far-right nationalist Jewish Home party, who vowed to ramp up settlement construction in response to the release.

Media reports suggest Israel is planning to announce the construction of 1,500 new housing units in the coming days, up to two thirds of them in annexed East Jerusalem.

There are still 5,007 Palestinian prisoners in Israeli prisons, including 137 administrative detainees, 12 women and 180 children, according to prisoners support group Addameer.